Online Trading Concepts

Triangle Pattern

For a more detailed description of the triangle chart pattern in a video format, see Symmetrical, Ascending, & Descending Triangle Chart Pattern Video. The Triangle is a continuation pattern using the concepts of support and resistance and price breakouts.

The chart below of (AMZN) shows the Triangle continuation pattern:

triangle continuation pattern

Generally, when prices make significant moves, they go through a period of resting. Usually with a Triangle pattern, the price consolidation period consists of higher lows and lower lows, forming the shape of a "triangle". When the resistance and support lines (see: Support & Resistance) begin converging, price can burst out of the consolidation area and it is expected that the price action will continue trending in the direction that prices have been moving previously.

Triangle Breakout Potential Buy Signal

A potential signal to buy is given when the resistance line is penetrated to the upside. The signal is generally expected to be stronger if prices have been in an uptrend prior to the upside breakout.

Triangle Breakout Potential Sell Signal

A possible sell signal occurs when the support line is penetrated to the downside. Usually the sell signal is considered stronger if prices have been in a downtrend prior to the downside breakout.

Two other closely related variants of the Triangle pattern are the Ascending and Descending Triangle pattern; these two patterns are shown on the next page.

Next Page - Ascending and Descending Triangle Continuation Patterns